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High-end retail is in big trouble and technology is going to save it

It’s no secret that as mobile technology continues develop - and disrupt - the global retail marketplace, many brands are struggling to catch up. But as customers all over the globe continue discover new brands and interact with the brands they love in more sophisticated and satisfying ways, we’ve reached the inevitable. We are fast approaching the time - actually, we’re probably already there - where there will be two kinds of retailers: those that build their entire strategy on a robust mobile foundation that allows brands to connect with their customers in the most intimate, meaningful, (and profitable) ways; and those that simply fail.

That may sound like an over simplification but it’s not. The data gleaned from the first ever NewStore “Mobile Retail Report” shows how we use our smartphones as the “remote control” of modern life, but retailers are lagging to fulfill our needs. For retailers (the successful ones at least,) this means they must meet their customers on mobile (first via all digital media, always via robust apps and progressive web). This goes way beyond basic social commerce, chatbots or native apps. The brands that are successfully using technology to drive customer engagement and sales (both in-store and on every digital channel) are completing the brand experience.

You may think I’m advocating for building “mobile-first,” the well-known concept that says brands should build websites for mobile-first, and then for desktop and other platforms. In a way, I am, but I believe that retail will be a smartphone only business in just a few years; therefore, I advocate for building “mobile-up.”

Mobile-first is an important step toward full digital integration, but this old-fashioned strategy only affects websites and other front-end experiences - that are fast becoming obsolete too (but that’s the subject of an essential but entirely different story).

The dynamic brands that are building mobile-up, on the other hand, are starting from the idea that mobile is soon going to be the only way brands do business. This is because building mobile-up allows retailers to provide their customers with dynamic mobile experiences where they spend the most time - on their smartphone. And this not only allows retailers to engage and communicate with customers in the most intimate ways, it also unlocks three opportunities for brands that desktop and social commerce will never be able to accomplish.

Building “mobile-up” is the quickest and most effective way to get closer to your customers

Every fashion brand wants to have a strong relationship with its shoppers. But brands traditionally don’t have access to the tools and platforms to follow through. Desktop, email, even Instagram, Facebook and Twitter, all put a ceiling on how close a brand can get to its customers. Brands can only get so personal. Mobile breaks this ceiling by allowing brands direct and constant access to their customers, on a device that never leaves their possession.

Communication between a brand and a consumer might exist through text message, a native app, Facebook Messenger or WeChat. The actual platform doesn’t matter as much as the mechanism and what it affords: a direct line to the customer for the brand and a direct line to the brand for the customer. This is the catalyst for the humanization of brands, where customers can now have one-on-one interactions with companies they care about. This has never happened before, as mass emails and advertising campaigns have always spoken broadly at customers, not with them. Sure, websites offer tailored product recommendations based on past purchases and browsing history, but how intimate is that? Mobile is the first opportunity to reshape the interaction layer between brands and customers, and retailers are just starting to uncover the possibilities.

Building mobile-up is proven to increase customer loyalty

Increasing customer loyalty is the next opportunity to focus on when building mobile-up. Once brands are closer to their customers (thanks to the direct access mobile affords) they can then focus on increasing loyalty. Customer loyalty is a behavioral change that often has little to do with traditional perceptions of loyalty, such as point systems and custom credit cards. Mobile-up loyalty means offering exclusive experiences, interactions and products to a brand’s best customers. It means nurturing a relationship and using impactful techniques to make customers more loyal - to make them feel better and different. Mobile-up is the reality of building businesses where customers have remote control for their favorite brand always in the palm of their hand.

When thinking of loyalty mobile-up, it’s crucial to focus on the intended outcome before thinking through the mechanisms. Many of these outcomes, such as having shoppers buy more often or buy in bigger amounts, can be solved by bigger ideas, enabled by mobile. This is a move beyond the transactional toward the experiential. For example, it’s been fascinating to watch the community that brands like Outdoor Voices, lululemon and Bandier have built around its recreational outings such as running, basketball and yoga. They have engendered the need to be active, both in a physical sense and in terms of active participation in the brand. There’s immense potential to use mobile to build more of these experiences and engage a wider set of consumers.

Building mobile-up magnifies the impact of a brand’s most precious resources - its people and stores!

The positive paradox for brands that embrace sophisticated mobile technology is that their opportunities to communicate with customers (especially luxury brands with powerful and intuitive mobile apps) make a positive impact on in-store experiences as much as they affect online experiences. And they also impact shoppers as much as they impact sales associates on a wonderfully human level. When used to the fullest degree, mobile is the thread that ties a brand together, online and offline. And these capabilities are much more powerful than the simple digital tools brands use to talking at their customers in a way that there’s rarely an opportunity for customers to have a real conversation with a real person—who also happens to represent your brand.

If these previous mediums allowed brands to build communities, mobile empowers brands to build fans and advocates. Customers identify with brands they feel a deep connection to. This includes a brand’s values, language and aesthetic. Brands taking advantage of these opportunities need a very different mindset than the one required in the past to build a mere community. It is no longer good enough to move existing experiences or communities elsewhere, from say desktop to mobile. Most mobile experiences still have the stain of desktop on them, which is why conversion rates are so low.

Mobile has the potential for the highest brand engagement ever, but it requires native experiences built with mobile in mind from the ground up. Brands that follow this path and use the medium to grow the pie will be rewarded with a cult-like dedication of their customers.

Stephan Schambach, Founder & CEO

Stephan is a serial entrepreneur with a proven track record of creating and growing successful tech companies in the United States and Europe. Under his leadership and vision, he brought Intershop and Demandware to IPO's with multi-billion dollar market caps. As Founder and Chief Executive Officer of NewStore, Stephan is setting out to change the market once again. This time by solving the omnichannel problem facing so many retailers and brands.